The Australian Dollar Declines as US Dollar Stays Strong
The Australian Dollar declines as the US Dollar holds steady amid rising geopolitical tensions
FUNDAMENTAL OVERVIEW:
- The Australian Dollar weakens as the US Dollar strengthens amid escalating geopolitical tensions.
- RBA Assistant Governor Sarah Hunter stressed that the central bank would adopt a cautious approach toward future rate cuts.
- Meanwhile, US economic data heightened investor concerns, as February’s Retail Sales fell short of expectations.
The Australian Dollar (AUD) declines as the US Dollar rebounds amid escalating geopolitical tensions in the Middle East. Market sentiment remains unsettled as the US reiterates its commitment to striking Yemen’s Houthis until they cease attacks on Red Sea shipping. On Monday, former President Donald Trump warned that he would hold Iran accountable for any assaults by the Houthi group it backs in Yemen. Since Trump’s return to office, his administration has expanded the largest US military operation in the Middle East.
The AUD/USD pair strengthened as the US Dollar (USD) weakened amid rising trade tensions and mounting economic concerns in the United States (US).
Reserve Bank of Australia (RBA) Assistant Governor (Economic) Sarah Hunter stated late Monday that the central bank will adopt a cautious stance on rate cuts. The February statement highlighted that the RBA board remains more conservative than market expectations regarding further easing. Hunter also stressed the importance of monitoring US policy decisions and their potential impact on Australian inflation.
However, the Australian Dollar may come under pressure as US President Donald Trump reaffirmed plans to implement reciprocal and sectoral tariffs on April 2. Trump confirmed that there would be no exemptions for steel and aluminium and announced that reciprocal tariffs on specific countries would be introduced alongside auto duties.
The Australian Dollar gained support after China unveiled a special action plan over the weekend to stimulate consumption and boost market sentiment across the region. The initiative includes measures to increase wages, encourage household spending, and stabilize stock and real estate markets. Given China’s significance as Australia’s key trading partner, any positive developments surrounding the stimulus plan could further strengthen the AUD.
AUD/USD TECHNICAL ANALYSIS CHART:
Technical Overview:
AUD/USD is trading within a up channel.
AUD/USD is moving above all the Moving Averages (SMA).
The Relative Strength Index (RSI) is in Buying Zone, while the Stochastic oscillator suggests Neutral trend.
Immediate Resistance level: 0.6374
Immediate support level: 0.6351
HOW TO TRADE AUD/USD
After a sharp decline, AUD/USD found support and reversed to the upside, forming higher highs. The pair has since broken through its resistance level and is now trading above it. However, it is currently facing rejection from the upside, leading to a pullback toward a critical level. If AUD/USD holds its support zone and key Fibonacci levels, it could resume its upward movement.